Industry bodies had been vociferously demanding scrapping of octroi that allegedly lacked transparency and affected movement of goods. The government has already replaced it with LBT in many cities, but not in key cities such as Mumbai, Pune and Pimpri-Chinchwad.

In Mumbai,the Brihanmumbai Municipal Corporation’s plans to bring in Local Body Tax (LBT) system by abolishing the octroi may make the Rs 40 crore spent on the upgradation of the octroi nakas seem like a waste. The BMC has decided to introduce the local body tax, by abolishing the age old octroi.The new tax that replaces octroi is being introduced in Mumbai from October 1 and will apply to small and big businessmen who earn over Rs 3 lakh per annum. It has already been implemented in 19 corporations statewide since 2010, with Navi Mumbai and Thane having come under its ambit on April 1 this year. Traders say they are not unwilling to pay the tax, but fear harassment by civic officials who can inspect their account books at any time.

Maharashtra government said that it was firm on implementing Local Bodies Tax (LBT) and would not backtrack from it even as traders’ bodies continued to oppose the new levy.The Chief Minister,Mr.Prithviraj Chavan stated that it was after extensive deliberations that they decided to introduce LBT & that the government is firm on it and will not backtrack.About traders’ demand to increase VAT by one per cent instead of introducing LBT, he said that VAT is for the entire state. If a cess is charged on VAT, people from rural areas will also be affected.

On Monday, closure of shops was reported across south Mumbai from Fort to Kemps Corner, Dadar-Matunga and from Bandra to Dahisar. Retailers in Ghatkopar and Chembur will join the stir from Wednesday.At Marine Drive, the police had to resort to a mild baton charge against protesters on Monday.According to the figures claimed by the Federation of Retail Traders Welfare Association (FRTWA) more than one lakh shops, except for medical stores, remained close on Monday. The shut down meant the loss of approximately Rs 500 crores. A section of wholesale market traders is already on strike against the imposition of LBT.

The Chief Minister said that the objective of introducing LBT in lieu of octroi was to make the municipal corporations financially stronger.He had authorised the municipal corporations in the state to decide the rate of Local Bodies Tax.LBT, facing opposition from traders, came into force in Nagpur, Pune, Pimpri-Chinchwad and Thane municipal areas on April 1. It is proposed to be introduced in Mumbai civic body from October.